Rules issued for China's revenue bonds

The Ministry of Finance on Tuesday clarified the definition and issuance rules of China's revenue bonds, after it issued rules for general obligation bonds on March 17, two moves that lay the foundations for a genuine municipal debt market in China.

In a statement on Tuesday, the Ministry of Finance defined "special local government bonds", the equivalent of US "revenue bonds", as those issued for public projects that are expected to yield some revenue, with repayment to come from the issuing jurisdiction's government-managed funds or revenue of corresponding projects.

General obligation bonds are those issued for public projects that are not expected to generate revenue, with repayment to come from local government's fiscal revenue, the ministry said.

Revenue bonds can have maturities of one, two, three, five, seven or 10 years, but seven and 10-year bonds can not exceed 50 percent of the total issuance in a year, according to the rules.

China granted a 500 billion yuan quota for issuance of general obligation bonds and 100 billion yuan quota for revenue bonds for 2015.